CVS Caremark’s FEHBP Violations Cost Taxpayers $615 Million — So Why Does the Cycle Keep Repeating?

Something is shifting, and this time the Federal Government brought the receipts. On March 13, 2026, the Office of Inspector General released a final audit titled “Audit of the Blue Cross Blue Shield Association’s Service Benefit Plan’s Retail and Mail Order Pharmacy Programs as Administered by CVS Caremark for Contract Years 2018 Through 2021” (Report №2024-SAG-013). Their report did not bury the lead. It found that CVS Caremark overcharged the Federal Employees Health Benefits Program by $615,148,628, including lost investment income, tied largely to failures to pass through negotiated discounts, credits, and other financial benefits required under contract.

The breakdown matters because it is quite specific. The audit identified $478.7 million tied to discounts that were negotiated but not passed through, $108.6 million in transmission fee credits that were not returned, and another $27.8 million tied to incentive payments above pricing guarantees. These findings span four contract years from 2018 through 2021, which means this was not a one-time error or an isolated claim. It was sustained over multiple years inside one of the largest federal health programs in the country.

This is not the first time federal auditors have raised these types of concerns. On March 27, 2024, the Office of Inspector General issued “Audit of the American Postal Workers Union Health Plan’s Pharmacy Operations as Administered by Express Scripts, Inc. for Contract Years 2016 Through 2021” (Report №2022-SAG-029). That audit identified questioned costs of approximately $44.8 million and examined pricing, rebates, administrative fees, and fraud and abuse controls within the FEHBP structure. Additional analysis tied to the audit highlighted millions in retained rebates, failures to pass through retail pricing discounts, and concerns about pricing disparities across dispensing channels.

When you place these two audits side by side, one involving CVS Caremark and one involving Express Scripts, the pattern becomes harder to dismiss. Both were conducted by the same federal oversight body. Both examined FEHBP-related pharmacy benefit operations. Both focused on contract compliance, pricing integrity, and whether financial benefits were fully passed through to the program. Both found significant discrepancies.

This is where the conversation shifts from audit findings to enforcement. Because these are not one-off incidents. The companies named in these audits are the same companies that appear repeatedly in federal and state enforcement actions. Public data compiled by Good Jobs First’s Violation Tracker shows that CVS Health, Cigna, and UnitedHealth Group have each accumulated billions of dollars in penalties and settlements tied to healthcare fraud, consumer protection violations, and regulatory compliance failures over time. Those cases span agencies and jurisdictions, including actions by the Department of Justice, the Department of Health and Human Services, and state attorneys general.

There are specific examples that illustrate how long this has been going on. In January 2022, CVS Caremark agreed to a $4.8 million settlement with the Oklahoma Insurance Department related to alleged violations of pharmacy choice laws. In November 2022, Express Scripts agreed to pay $3.2 million to resolve claims tied to overcharging. State investigations into spread pricing, including the well-documented Ohio Medicaid case, identified hundreds of millions of dollars in excess costs and resulted in large settlements. These are not edge cases. They are part of a consistent enforcement record tied to the same core business practices that federal audits are now examining inside federal programs.

The Federal Trade Commission has also been part of this history, particularly in its review of mergers involving Aetna, Express Scripts, and other vertically integrated entities. Those actions were intended to preserve competition and impose guardrails. What they did not fully resolve were the underlying financial incentives that drive how pharmacy benefits are administered. That matters now because the same vertically integrated structure sits at the center of the audit findings.

So, the question becomes straightforward. If audits identify overcharges in the hundreds of millions and enforcement actions have already resulted in billions in penalties across the same companies, what is changing?

Audits are doing exactly what they are supposed to do. They document discrepancies tied to real contracts, real claims, and real dollars. The March 13, 2026 FEHBP audit quantified suspicions. The March 27, 2024 Postal Service audit did the same. Each report adds to a growing record that shows how difficult it is to verify pricing, rebates, and financial flows within the current system, and more importantly how these companies seemingly taunt regulators with “Catch me if you can” attitudes.

Enforcement actions have also occurred, but they have largely taken the form of settlements, fines, and corrective agreements. Those actions address specific violations, but they often leave the broader structure intact. That creates a cycle where issues are identified, resolved on paper, and then reappear in a different form or a different program.

This is where the current moment matters. The Federal Trade Commission is actively pursuing actions and proposed settlements involving PBM-affiliated entities. The question is whether those settlements will meaningfully change behavior or whether they will function as another opportunity to shift the game to another target within the same system.

If the underlying incentives remain unchanged, transparency requirements alone may not be enough. Reporting can increase visibility without necessarily altering how pricing decisions are made or how financial benefits are distributed. That does not make enforcement irrelevant. It raises the stakes on getting it right. And we MUST get it right.

For taxpayers, the implications are direct. The Federal Employees Health Benefits Program represents tens of billions of dollars in annual spending. A finding of $615 million in overcharges in a single audit is not a rounding error. It’s an egregious, willful act of fraud, waste, and abuse. When similar findings appear across multiple programs and multiple years, the cumulative impact becomes significant.

For patients, the consequences show up in access and affordability. The same financial pressures that appear in audit findings influence network design, reimbursement levels, and where patients are directed to receive their medications. That can mean fewer local options and a system that prioritizes internal channels over patient choice.

There is a tendency to treat audits as endpoints, as if identifying the problem is the final step. In reality, audits should only be the starting point for decision-making. The March 2026 CVS Caremark audit and the March 2024 Express Scripts audit have created a documented record that is difficult to ignore. The enforcement history tied to these companies shows that regulators are aware of the risks. The violation data shows that these are not isolated events.

The question now is whether enforcement will evolve to match the scale and consistency of the findings. That could mean stronger financial penalties, tighter contract enforcement, structural reforms, or a combination of all three.

What it cannot mean is simply documenting the same issues again in the next audit cycle.

Because at some point, the conversation shifts from what is happening to why it is still happening. And that is the question we must continue to ask: At what point do these cumulative violations become enough?

For taxpayers and patients, we have reached the point where action is no longer optional.

Brandi Chane, PUTT Board Member